135. Minister, welcome to the Committee. Perhaps
you could identify yourself and your colleagues.
(Ms Primarolo) I am Dawn Primarolo. I am the Paymaster
General. With me I have Michael Hanson, who is the Director of
Finance and Strategy, and Derek Hodgson, who is Head of the Analysis
Division.

136. Can I thank you for coming today, not least
because, as I understand it, you do not now have responsibility
for Customs and Excise, although you had at the time. That is
the position, is it not?
(Ms Primarolo) That is correct. I thought it was appropriate,
given I discussed it with the Committee before and I commissioned
the report, that you may want to return to this issue with me.
I am sure there are many other issues you may want to return to.

137. We understand that and appreciate it. Can
we start generally with the Roques Report? Do you accept it?
(Ms Primarolo) Yes. The recommendations in the Roques
Report, 62 of them, have been accepted and I think that it provides
a very thorough analysis of the issues around diversion fraud,
and indeed the NAO report concurs with that, which was published
alongside it.

138. When you say that you accept the recommendations,
do you accept the findings of the report as well?
(Ms Primarolo) Yes, and indeed that is why I commissioned
such an investigation to look at the issues surrounding the loss
of revenue over a period of time and to address how that occurred
and what changes needed to be made to respond to that disclosure.
Obviously there was difficulty in some respects in that the inquiry
period covered a period including the previous government, and
I felt that Parliament would want to know how it happened, why
it happened and how much and that it would not happen again.

139. One of the findings, and we took evidence
from Mr Roques, was that the original estimate of losses was some
£670 million, but Mr Roques told us, and I quote: "The
actual losses were almost certainly much, much larger than that.
I estimate an order of magnitude of £500 million a year."
Do you accept that?
(Ms Primarolo) Can I be clear exactly what part of
the Roques Report you are asking me to comment on there because
the recommendations, and indeed endorsed by the NAO Report, were
firstly to focus on the specific issue of alcohol diversion fraud
and the losses that had not been accounted for by the Department
in its accounts over a number of years. Mr Roques then went on
to make recommendations generally about fraud estimates and the
exposure to revenue loss to the Department. With regard to the
figures, specifically on diversion fraud, the figure is in the
region, as Mr Roques has confirmed and the NAO, I think it was
of £500 million and separately there are questions of other
frauds which the Department published as part of the PBR yesterday
and details of those fraud estimates with the methodology of how
they came to those conclusions. So there are two different sets
here: for the loss as a result of diversion of fraud through those
warehouses, the figure is in the region of the figures that Mr
Roques identified and the NAO confirmed, yes.